Scammers still preying on struggling homeowners

August 17, 2013|By Donna Gehrke-White, Sun Sentinel

Nicholas Torgerson was a vice president at Fidelity Land Trust Co. in Boca Raton last September when Florida Attorney General Pam Bondi swooped in with an injunction to stop the company's shady mortgage-relief scams.

But when one door closes, another swings right open. Torgerson, according to another injunction filed by Bondi's office last week, was right back at it with a new company, Whitestone Capital Trust, doing the same thing.

The 31-year-old Torgerson promised to make "right" homeowners with upside-down mortgages — but if only they would send him thousands of dollars in upfront fees. He would collect fees under the guise of modifying loans for clients but without actually doing anything to help. According to Bondi, Torgerson and his company scammed distressed homeowners out of money they couldn't afford to lose.

"Whitestone made false promises and misrepresentations to consumers," according to the lawsuit Bondi's office filed.

Torgerson is accused of being part of an elaborate web of mortgage fraud that has engulfed South Florida since the Great Recession hit several years ago. Prosecutors and some defense attorneys describe scamsters as concentrating on boiler room operations to prey on distressed homeowners in Broward, Palm Beach and Miami-Dade counties, where one out of 43 homeowners are in some foreclosure danger, the highest rate of any metro area in the nation.

"It's real easy to find victims [to call]," said West Palm Beach attorney Andrew Stine who said he has represented more than 100 accused mortgage fraudsters throughout South Florida. "All they do daily is look at the public records online" for foreclosure or lien filings.

Many of the mortgage fraud defendants know each other and use similar sales tactics and pitches, attorneys say.

Before he started Whitestone, Torgerson was at Fidelity Land Trust, which had established a broad network in just three years, according to court records. The company had at least 10 "sister" mortgage relief companies located in Boca Raton, Coral Springs, Parkland and Lauderdale-by-the-Sea that had been incorporated since 2010 "to make false promises and misrepresentations to consumers," the court records show.

Attorney Peter J. Snyder, who represents Edward Cherry, a founder of Fidelity Land Trust, said the intention of the company was to help homeowners fight big banks and their aggressive foreclosure practices. For a fee, Fidelity Land Trust put properties in a trust to shield them from the foreclosure process.

But the Attorney General's office alleges that Fidelity Land Trust and other similar operations take money — but don't deliver help to homeowenrs. The number of victims just this year is well into the hundredsr, according to court records. Fidelity Land Trust alone is accused of working on 330 properties in just 10 months despite a judge imposing an injunction.

Rose Arango of West Palm Beach recently testified at a hearing that she and her husband first paid $3,000 to Fidelity Land and then another $1,200 with the belief that the money was to pay for two months of mortgage payments.

But in six months the refinancing never came through — despite promises it would take only eight weeks or so.

"By that time, I already had a very strong feeling that some things were wrong," Arango testified.

Attorney Spencer Kuvin for Fidelity Land Trust said she wasn't patient enough for the company to deliver what it had promised. Other legal counsel say state agencies have gone after Fidelity Land Trust because banks don't want them around.

"This is a push-back," said attorney Snyder. "The state Attorney General really represents the banks that don't want the consumer to beat them out of the mortgage."

Other attorneys say the entire state has become a magnet for scam artists preying on struggling homeowners.

Bosses typically set up "boiler rooms" in which people are hired to cold-call people who are struggling financially or even facing foreclosure, said Stine, the West Palm Beach attorney.

The scam artists simply follow a script: They can, for a fee of thousands of dollars, obtain a loan modification or get the principal reduced on a mortgage so it is not more than the actual value of a home, he said. However, it is against the law in Florida for a company to charge upfront fees for mortgage modification work.

"All they are doing is churning and burning. They are overpromising without delivering," Stine said.

Many South Florida mortgage fraud schemes now prey on middle-class homeowners trying to reduce the mortgage principal on "underwater" homes, said Fort Lauderdale attorney Ralph Behr, who has represented about two dozen accused mortgage scammers.